This is a managerial accounting question l Ut would be applied to the output of

Question

This is a managerial accounting question l Ut would be applied to the output of the period rhead EXERCISE 8A-4 Selected Fixed Overhead Variances [LO8-1 operating information on three different companies for a recent year is given below: 398) t of a Company ??? 10,000 18,000 20,000 ate by . 400) Full-capacity machine-hours. 9,000 17,000 20,000 Standard machine-hours allowed 9,500 16,000 20,000 for actual production Denominator activity for computing the predetermined overhead rate. stan- Required For each company, state whether the company would have a favorable or unfavorable volume variance and why

Explanation / Answer

Company A B C Budgeted Machine Hours 9000 17000 20000 Actual Machine Hours 9000 17800 19000 Volume variance No variance Unfavourable Favourable In volume variance ,If, Actual Machine hours is more than Budgeted Machine hours then Unfavourable and vice versa.

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